Saudi Arabia to develop Islamic finance

Saudi Arabia is well-placed to play a crucial role in the development of Islamic finance since the largest Islamic banking institutes are based in Gulf Cooperation Council (GCC) countries.

Saudi Arabia is well-placed to play a crucial role in the development of Islamic finance[2] since the largest Islamic banking institutes are based in Gulf Cooperation Council (GCC) countries.

According to Ahmad Mohammed Al-Joghaiman, executive vice president and chief financial officer of Saudi Electricity Company, the Kingdom's dominant economy makes it the perfect contender to encourage banking that is carried out with strict adherence to Shariah law.

The practice gained momentum in the 1970s and is now offered by a growing number of financial service providers, including HSBC.

Firms practising Islamic banking are also said to have fared better than others following the 2008 global recession.

Mr Al-Joghaiman suggested a number of measures to develop the practice throughout the Kingdom, such as the creation of a clear and legal framework from the government and specialised courses on Shariah-compliant banking from universities.

"With all such efforts from stakeholders one day, maybe Islamic financing might come into main source of financing rather than as an alternative to conventional financing as currently viewed," he said.